MGR Unplugged

The NBA Playoffs.  First week recap, and what we have learned so far.

After being forced to classify their workers as employees rather than independent contractors, Lyft suspends service in CA.  Uber may follow.  Then CA judge reverses order and they both decide to stay... for now.

How quickly California is becoming the "no fun state."  

A new B 1253 proposal wants to increase the top tax rate for high earners to 16.8% making the combined tax rate for top earners at 53.8% and this would also apply to capital gains. If approved in August 31st , it would also be retroactive to January 1st, 2020.  

On top of that, a new an unprecedented AB 2088 proposal includes a first-in-the-nation “Net Worth Tax.”  This proposal will create an additional 0.4% tax rate for individuals with a net worth above $30 million.  And for those planning on moving out of the state, the legislation includes a provision to tax retroactively for 10 years, although it will drop over time for each year they are out of the state.  This is not about income, but rather about assets, so the interpretation of assets value by each party will be interesting.  The exodus of VCs, start-ups and high net worth individuals has started...

Add to that the ongoing wild fires in the stated causing all kinds of trouble, costs and aggravation to California residents. Did you know? CA has had 6,754 wild fires this year, compared to 4,000 at this time last year, according to Governor Newsom.  As is COVID-19 wasn't enough, add now pollution, traffic, power blackouts, smoke in the air, high taxes and expensive living... no more California Dreamin'  Welcome the new California Exodus.

Finally, Airbnb files confidential IPO.  What does that mean?  It did not disclose financial information or how many shares would be offered.  However, the company was valued at $18 billion in April, is about half of the valuation it had in 2017.  We will follow closely how this IPO develops in the coming weeks.

All that and more in this episode of MGR Unplugged. 

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In this episode:

We start with a few comments about the NBA "bubble" format and how it has been a welcomed distraction from the ever present pandemic news.  We take a detour to rant more about the pandemic and the inconsistencies of all governments around the world managing it.

But our main topic is the USPS. The US Postal Service is on the brink of crisis, and it's nothing new.  Even before the coronavirus pandemic, the United States post office had been atrophying from financial turmoil. Over the past decade, post offices have been closed across the country, rural mail delivery is stretched thin, and thousands of post office workers’ positions have been eliminated.

The outgoing postmaster general recently warned that without immediate support the agency could run out of funds within the year, and in that case might need to shut down... and Trump is not being very sympathetic about the entire situation.

Meanwhile, the NBA is headed for the playoffs and the new Bubble format of play has been a success, for teams and fans alike.  Have we learned something from it that could be applied to future seasons?

Lyft joins Uber in threatening to pull out of California over driver status. The companies say they can’t afford to classify drivers as employees after ordered by California judge to classify drivers as employees .

Google Travel adds new pandemic-related travel planning information, Better information on flights, hotels, and free cancellations.

All that and more in this episode of MGR Unplugged. 

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Manuel and David start this episode discussing the NBA "Bubble" in Orlando.  Games are surprisingly competitive and nobody seems to miss the crowd.  

The Pandemic keeps dominating the news, yet, nothing new is reported.  There's lots of confusion about what's to come in the coming weeks and months, facing US elections, back-to-school, college live and this year's Holiday Season.

For now, the government just keeps printing money to keep the economy afloat.  So much so, that inflation is casting even a larger shadow than ever, causing gold and silver prices to reach a new record high each day.

Microsoft is in negotiations to buy TikTok from Chinese company ByteDance.  Terms of the sale are not specific as of this writing but it's rumored to be in a wide range between $30 and $60 billion.  

After last week's Big Tech Anti-trust Hearing, Facebook, Apple and Amazon shrugged and moved on to report record quarterly benefits.  And speaking of doubtful competitive practices, Facebook is also launching Instagram Reels which attempts to be its own version of TikTok.  Will is succeed?  Time will tell but it seems to us that TikTok already has a very solid user base that won't be jumping ship too easily.

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Testifying before THE HOUSE ANTITRUST subcommittee, the CEOs of Apple, Google, Amazon and Facebook (Tim Cook, Sandar Pichai, Jeff Bezos and Jeff Zuckerberg).  The hearing was about business practices that are considered to be a monopoly.  This is an important clarification since other major tech companies CEOs like Twitter or Microsoft were not present. 

Due to the pandemic, all four CEOs were testifying remotely. They had to swear that their testimony and answers were not fed by their staff.  There were other technical difficulties throughout the 5 hour hearing.

The four of them were given 5 minutes to make some opening remarks.  Bezos and Pichai highlighted their humble upbringings, while Tim Cook focused on the greatness of Apple as a unique American company and Zuckerberg mentioned how Facebook’s goal is to stand for “American Values” in a global market.

Contrary to previous similar tech hearings, this time the members of judiciary committee seemed to be well prepared and asked very specific questions about the regular business practices of each of their companies.  If anything, it looked more like the CEOs were less prepared and not quite ready to provide straight answers to most of the questions.

As far as the main points of questioning for each company, here are some highlights:

Facebook was asked about cloning products of other competitors while also trying the acquire them.  Instagram is the more clear case, although Snapchat has suffered from this cloning of their features numerous times.  Zuckergerg was also questioned about Russian election interference, his role in promoting racism and anti-Semitism as well as Facebook’s response to the recent boycott of major advertisers as a response to Facebook’s business practices supporting hate for profit.  The recent #stophateforprofit was supported by 1,100 advertisers to which Zuckerberg replied that “we’re also not going to set our content policies because of advertisers.  I think that would be the wrong thing for us to do.  We’ve cared about issues, like fighting hate speech for a long time.”

Amazon was accused of mining their party sellers data to develop and launch its own products according to a Wall Street Journal report.  Bezos couldn’t deny the report, although he did say that they have a policy against using that type of data for their own private label benefit.  He also added that Amazon is very proud of what they’ve done for their third-party sellers on Amazon’s platform.  

Google’s Pichai was questioned about some of the company’s practices, like stealing reviews from other businesses (i.e. Yelp) as well as the use of customer data to boost their own advertising revenue.  As far as their advertising practices, Google was accused of the equivalent of “insider trading” in the ad exchange market, by controlling the market place from the buy side and the sell side as well as the publishing side at the same time.  This was even more clear after the acquisition of DoubleClick.  When questioned about Google steering ad revenue to Google search, Pichai simply said that “we’re focused on providing users with the information they’re looking for.”

Tim Cook had to clarify Apple's policies when it comes to the Apple Store regarding alleged unfair treatment of third parties, specifically developers who are at Apple’s mercy if they want to reach iPhone customers through its App Store. 

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The future of airline travel.  Is the new normal model sustainable for the airline industry?  We think not.  Airplanes flying at half capacity when airlines were already operating with thin margins at full capacity will not be viable for many of the major carriers.

And what about passengers?  Airports and TSA are implementing new safety measures but the reality is that they are not very effective.  Social distancing is not respected, masks are worn randomly, not to mention the amount of people that simply cover their faces partially with a bandanna or any other type of makeshift. non-filtering fabric material.  Right now, it's up to the passengers to determine their health status before boarding a flight. 

For airlines to operate at full capacity, some type of pre-boarding, rapid COVID-19 test will be required.  Perhaps even presenting proof of passing a test 24 hrs before the flight.  Very similar to the type of frequent testing being performed by major sports leagues as they resume their seasons.

Meanwhile, we're in the middle of the summer now and nobody seems to know whether schools will be open to students this fall, at what capacity, or even if they will remain closed until the end of the year. Parents are torn between sending their children to school, or shuffling their own work schedules if their children are staying home instead.

And retailers are starting to make plans for a Holiday Season full of challenges.  Black Friday may never be the traditional Black Friday rush to the stores that we've been used to experiencing over the past years.  Walmart and other retailers starting to realize that they may have to cancel their in-store Black Friday plans as they are deemed potential hotbeds for spreading COVID-19. 

Welcome to the new Cyber Friday!  This year's Black Friday may very well be entirely online.  Get ready for the biggest money making period in the history of eCommerce.  And if you're not ready... well, let's not get too negative yet.

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In this episode:

Twitter Gets Hacked - The Inside Job

Several high-profile Twitter accounts got hacked on July 14.  Preliminary investigations reveal that it was a Twitter employee who somehow provided access to Twitter's internal admin tools.  And those admin tools, revealed quite a bit about Twitter's ability to manipulate and control the conversations and trends on the platform.  What next?

The Global Economy Downward Spiral

The US Economy is heading in the wrong direction.  There's a huge disconnect between Wall Street, Main Street, The Fed, and by extension, the World's central banks.  All of a sudden, it seems like printing money is the only solution, but that will just get every country deeper into trouble.   The sad news is that there's no easy or popular solution to this problem, so don't expect any President or global leader to provide a long term solution while working on a 4 year re-election plan.

Rant of the Week:

Finally, it's been around six months since the pandemic started, yet we know about it just about the same that we knew six months ago, which is next to zero.  We're still debating whether wearing masks is a solution or a pointless band-aid, we're still debating how the virus spreads, who's more at risk, and what the real mortality is for individuals with no pre-existing health conditions.  Each country is now starting to "shoot from the hip" and hoping to aim right, yet, citizens around the world are getting more and more frustrated.  Every new COVID-19 headline now becomes a political headline rather than a health news headline.  There's no leadership and unfortunately, the US is not leading by example either.  Patience has a limit.

What do you think?  Take a listen and let us know your thoughts.

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Last week, India’s Ministry of Electronics and Information Technology banned more than 50 Chinese mobile apps, one of them being TikTok.  It is estimated that around 200 million of TikTok's users are from India. 

Hong Kong is following suit and banning TikTok as well.  The reason?  According to Indian officials, the banned apps “represented a threat to citizens’ privacy and national security. The agency noted it had received complaints that the apps were “stealing and surreptitiously transmitting users’ data” to servers outside the nation, an activity that, the ministry said, “ultimately impinges on the sovereignty and security of India.”

The US has also expressed concern about several Chinese tech companies with heavy presence among US consumers, more recently Huawei and TikTok.

Earlier this week, Mike Pompeo US Secretary of State, was quoted as saying  that the US government is “looking at” banning TikTok and other mobile apps developed by Chinese companies.  He emphasized his concern about security issues by adding that US consumers should only use TikTok “if you want your private information in the hands of the Chinese Communist Party.”

On the eComm side, WalMart has officially launched its own version of Amazon "Prime."  Just one more step to compete with Amazon on equal terms.  Will consumers leave Amazon and sign up with WalMart, or will they accept paying two separate subscriptions?

We finish this podcast with David's "Rant of the Week."  As efficient as Amazon is on the consumer customer service side, they are completely inept when it comes to respond to sellers questions and issues. 

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Happy Independence Day to all of our fellow American friends!  

It's probably the most subdued 4th of July weekend for the US in recent history and a good time for us to put behind us the past six months that have been surreal to say the least.

But what will the second half bring to us?  Are we seeing light at the end of the tunnel and a return to a "new normal" or will we face a second wave of the pandemic bringing our lives to a halt again?

Most of the major sports leagues in the US and around the world are planning a re-start in the coming weeks so that would be a nice distraction from the daily dose of negative news that we get these days.

And, don't forget, we have elections in the US in four months... and do we really think either candidate can lead us out of this hole? 

All that and more in this episode of MGR Unplugged.

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The battles to own the platforms and audiences of the future are never ending, but one of the most important but least talked about is the battle for user generated live stream content.

Amazon is an incredibly strong platform, their biggest weakness is that they do not have any plays in social commerce, which will take over eCommerce in the coming years. Twitch is their golden ticket to change that, but they need to make changes to platform in order for it to become a part of the mainstream.

The biggest chasm Twitch is currently trying to cross is erasing the stigma of being a video game streaming platform to being a anything streaming platform, which they are doing.

If Twitch can grow beyond gaming and into being 'the' streaming platform in the age of social commerce, fully connected to Amazon's back end infrastructure fro fulfillment and payments, the sky's the limit for what the platform can be.

What do you think?  Take a listen and let us know your thoughts.

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The new Walmart-Shopify Agreement.  Can they take on Amazon?  And how can Shopify sellers benefit (or not) from the new Walmart Marketplace?

Retail sales up 17.7 percent in May but 6.1 percent below May 2019.  Despite that, the road looks very bumpy ahead and retailers are going to need to be very creative to keep attracting customers to their stores.

In the meantime, customers continue to shop online.  More eyeballs means higher costs to place your ads in front of them.  And we're seeing that trend. Facebook Ad Costs are now even higher than before the pandemic.  

And finally, as the US leaves the negotiating table, the EU is planning to move forward with the Digital Services Tax (DST) also known as the Google Tax or GAFA  Tax (Google, Apple, Facebook, Amazon).  The EU needs money, and what better way to bring fresh money than creating a tax targeted at American companies that succeed at what they don't?  

What do you think?  Take a listen and let us know your thoughts.

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